Today RIPEC released its annual report: How Rhode Island Compares, which provides details on state and local government revenue sources for fiscal year 2009, the latest year for which national data are available. The publication compares Rhode Island’s fiscal system with those of the other 49 states and the United States average using data released by the US Census Bureau on October 31, 2009. To see the full report, click here.
In FY 2009, state and local governments in Rhode Island collected $1.9 billion, or 21.0 percent, less revenue compared to FY 2008. Nationally, revenues declined by $587.5 billion, or 22.1 percent. The majority of revenue losses were related to negative investment returns in social insurance trusts (including public employee retirement systems, workers compensation and unemployment insurance trust funds). Tax collections were also lower in FY 2009 than in FY 2008; most tax revenue categories, with the exception of property taxes, fell both nationally and in Rhode Island.
Rhode Island’s tax burden remains among the highest in the country, ranking 11th highest as a share of personal income, and 13th highest on a per capita basis. In FY 2008, the state’s tax burden ranked 17th highest per $1,000 of personal income and 13th highest per capita. Although Rhode Island moved up in the national rankings when tax burden was measured as a share of personal income, year-over-year tax collections fell from $114.18 per $1,000 of personal income to $109.84 per $1,000 of personal income. This is, in part, a reflection of the slower growth in personal income in Rhode Island compared to the rest of the country.
By either measure – per $1,000 of personal income or per capita – Rhode Island’s ranking was driven by the state’s high property tax collections. Although Rhode Island ranked 11th highest for total tax collections as a share of personal income, the state’s tax collections were lower than the national average for all taxes with the exception of the property tax. Similarly, the state’s per capita tax collections were, in general, lower than, or similar to, the national average for all but the property tax.
Primarily as a result of declining tax collections, particularly individual income tax collections, property taxes as a share of total tax collections accounted for almost 45 percent of all state and local tax revenues in FY 2009, compared to FY 2008, when property taxes represented 42.3 percent of all tax collections. At the same time, the growing role property taxes play in supporting government is part of a longer trend. Property taxes have increased their share of revenues in Rhode Island every year since FY 2006.